Notifying your creditors of bankruptcy

Strictly speaking, you do not need to notify your creditors of your bankruptcy. Once the Bankruptcy Court processes your final paperwork, it will send notice to all the creditors you have listed in your filing. You will also receive a copy of the notice. Creditors must stop calling you once they have received this notice, although it can take several weeks before they get it. To prevent calls during this time, you can have your lawyer notify them or, when a creditor calls, you can simply tell them you have filed for bankruptcy and give them the bankruptcy case number. Verbal communication by telephone is just as binding as a formal written notice.

Discharge of Debt

How your debts are discharged depends on the form of bankruptcy you file. Under Chapter 7 bankruptcy, the court pays your creditors, based on priority, after liquidating your nonexempt assets. It then discharges any debt still left. Under Chapter 13 bankruptcy, you pay your creditors according to a plan you have submitted. Which creditors are paid under this plan is also based on priority. Once the plan is completed, any debt remaining is discharged. In either case, your creditors must abide by the court's decision regarding priority and discharge, even if that means some creditors get nothing. They may not require payment from you. However, a creditor who did not receive full payment may seize any property you used to secure the debt. To avoid this, you can "reaffirm" the debt and agree to pay it, even after discharge. Creditors holding unsecured debt do not have this recourse.

Continued Harassment After Notification

Some creditors may not abide by a notice of bankruptcy and may continue to call, harass and threaten you. This is especially true of some unscrupulous collection agencies. Do not let these calls intimidate you. Tell the caller that you have filed bankruptcy and that it is illegal for them to keep calling you. Tell your attorney if the calls continue. Other creditors may continue sending bills in addition to, or instead of, calling. It's normal to receive one bill that may have been in process at the time of notification, but continued billing is illegal. If you receive a second bill from the same creditor, return it with a statement written across the face of it that you have filed bankruptcy and it is unlawful to continue to bill you. If you have a copy of the Court notice, attach a copy to the bill, and keep a photocopy of everything for your own records. If you still receive another bill, send it to your attorney. Keep in mind that this does not apply to creditors you are supposed to keep paying. They are allowed to continue to contact you if your payments are delinquent. Be civil when communicating with your creditors regarding your bankruptcy. In the weeks immediately following your filing, it is possible they simply haven't yet heard. Many will stop calling once they know, and those that don't should be referred to your lawyer.